The California Residential Purchase Agreement is an ever-evolving document central to purchasing residential real estate in the state of California. In addition to a plethora of additional disclosures, the purchase agreement is the mechanism for submitting an offer on a San Mateo County home for sale. The document details the terms of the offer and then becomes the basis of escrow instructions. Within the purchase agreement is an important clause called liquidated damages. Both buyer and seller have the option to initial this clause, and it is only in effect if both parties do so.
When you write an offer on a San Mateo County home for sale, you will have many documents to sign. Many of them are boiler-plate and rather straight forward, addressing issues that have resulted in past litigation. The 16-page Residential Purchase Agreement has its fair share of legalese, but it also has many important clauses that a buyer should understand prior to signing. Because of its importance, your San Mateo County Realtor should walk you through this document in detail.
According to the California Association of Realtors, “A liquidated damages provision is an agreement in advance that in the event the buyer breaches contract, the buyer will owe a specified amount of money.” The liquidated damages section of the Residential Purchase Agreement (see image below) can be a bit confusing, yet your San Mateo County Realtor is not the right person to advise you about whether you should initial it or not, because they are not legal experts. They should explain it and provide you with as much outside information as is needed to ensure you understand the clause.
According to the Residential Purchase Agreement, “If Buyer fails to complete this purchase because of Buyer's default, Seller shall retain, as liquidated damages, the deposit actually paid.” It also states that, “The amount retained shall be no more than 3% of the purchase price.” So, the maximum amount a seller would receive if a buyer pulled out of a contract after all contingencies are removed would be $30,000 on a $1,000,000 purchase. If the buyer only put in $10,000 as a deposit, then the seller would only receive $10,000 in damages.
The California Association of Realtors clearly outlines the benefits for both the buyer and seller of initialing the Liquidated Damages clause. For both buyer and seller, the main advantage is certainty. Both parties know in advance the maximum amount of money that the seller would receive and the buyer would give up in the case of breach of contract. With the liquidated damages provision in place, the seller need only show that the buyer was in breach of contract. Without a liquidated damages provision in place, there is no automatic presumption that the seller is entitled to the deposit amount. Without the provision, the seller would be required to go to court and prove damages, which can be complicated and costly.
Liquidated damages is a complicated topic, and there are many nuances not discussed in the explanation above. Anyone writing an offer on San Mateo County real estate should do their own research, and if needed, consult with an attorney.
Veritas Homes is a boutique residential real estate brokerage servicing home buyers and sellers on the San Francisco Mid Peninsula. Founded by Val Vandervort, Veritas Homes (Latin for “Truth”) is committed to providing outstanding customer service to all and operate with “Truth” at the center of all we do. To learn more about the San Mateo Real Estate Market, read "Is the Mid Peninsula Real Estate Market Bouncing Back?". To learn about a great waterfront home for sale in San Mateo, read "Resort Style Living on the San Mateo Lagoon." To read about great opportunities for first time home buyers in San Mateo, read "First Time Homes Buyers: The Village San Mateo vs Sunnybrae San Mateo."
Your source for real estate news on the San Francisco Mid Peninsula
Redwood City is at the center of the Mid Peninsula and is a highly desirable community. Blessed with beautiful housing, strong public schools, and a convenient locati… Read more
When it comes time to sell your San Francisco Mid Peninsula home, your first task should be to find an outstanding Realtor. This important professional should have amp… Read more
Calling all shoppers. If you find yourself on the San Francisco Mid Peninsula (a truly beautiful place), make sure that you peruse the shops on Burlingame Avenue in Bu… Read more
Val Vandervort of Veritas Homes continues the discussion with Melanie Luders of Fidelity National Title Escrow. This time they discuss escrow title fees and how they a… Read more
Val Vandervort of Veritas Homes sat down with Melanie Luders of Fidelity National Title Escrow to discuss residential title and escrow in San Mateo County. The purpose… Read more
During my years growing up in San Mateo, I was aware of the Hiller Aviation Museum. I saw it while driving along the 101 freeway. I saw small planes flying in and out … Read more
Understanding what is happening with the Mid Peninsula real estate market is not an easy task these days. As Realtors centered in San Carlos CA, we have felt a market … Read more
Christmas is upon us. If you are like me, I’m busy buying and wrapping Christmas gifts, planning meals, and other such busy holiday activities. Sometimes it gets so bu… Read more
There is no doubt in my mind that San Francisco is one of the most beautiful places on earth. The rugged terrain, beautiful architecture, and gorgeous views are hard t… Read more
House prices in the Bay Area have been slumping over the past six months, and this includes Mid Peninsula real estate. It’s a strange occurrence for us. We are used to… Read more
The California Residential Purchase Agreement is an ever-evolving document central to purchasing residential real estate in the state of California. In addition to a p… Read more
San Mateo is a great place to live. Conveniently located on the Peninsula between San Francisco and San Jose, the city has an active business community, beautiful hous… Read more
New Price! 2708 Babe Ruth Avenue, San Jose 4 Bedrooms | 2 Baths 2,082 sq ft | 6,000 sq ft lot Built in 1976 Offered at $1,698,000 Beautifully remodeled one-story home … Read more
In Escrow! 3349 Brittan Ave #12, San Carlos 3 bedrooms | 2 baths 1,239 Sq Ft (Realist) HOA dues: $693/mo Offered at $948,000 Ideally located amidst a grove of Redwoo… Read more
San Mateo is a suburban center along the San Francisco Peninsula, perched between the Santa Cruz Mountains and the San Francisco Bay. With a variety of housing, strong… Read more
The news has been filled with bad economic news - including residential real estate. Most conversations I participate in include a belief that real estate markets acro… Read more
With Silicon Valley in our back yard, incredible weather, and natural beauty all around, the Bay Area is a great place to live (minus the traffic). The beach is an eas… Read more
The ideal way to meet a great Mid Peninsula Realtor® is to ask trusted friends, neighbors, or work associates for a referral. It is likely that if they had a good expe… Read more
2466 Hallmark Drive, Belmont 4 bedrooms | 3 baths 2,220 Sq Ft (Realist), 12,350 Sq Ft lot (Realist) Built in 1976 Extraordinary potential in a prime location with stu… Read more
New Price! 2634 Sequoia Way, Belmont Offered at $1,998,000 3 Bedrooms, 2 baths 1,805 sq ft (per floor plan drawing), 5,280 sq ft lot (Realist) Nestled in the hills o… Read more
The Big Story Silicon Valley housing market recession? Depends on who you ask. Quick Take: Home prices fell for the first time this year, declining 2.4% month-over-mo… Read more
Liz McGee Min of the Vandervort Group and Veritas Homes, shares insight from August 2022 single family home sales. Looking particularly at Belmont, Foster City, San Ma… Read more
In Escrow! 1160 Elm Street, San Carlos 3 bedrooms | 2 baths 1,350 sq ft (per assessor), 4,800 sq ft lot (per assessor) Built in 1948 Located in the popular Oak Park ne… Read more
To say there is a lot going on in our world and our country would be an understatement. War, COVID, inflation, stock market fluctuations, and rising interest rates are… Read more
“Change is never easy but it’s necessary for growth! Joining Veritas Home is about giving back to the community and providing outstanding services to our clients for t… Read more
One of the blessings of living on the Mid-Peninsula is the prevalence of beautiful architectural homes. We have a lot of them. Whether small or large, a well-designed … Read more
New Price! 2987 Melendy Drive Unit #2, San Carlos Offered at $1,198,000 2 bedrooms | 2 baths 1,570 Sq Ft (per assessor) HOA dues: $417/month Light, bright, and moder… Read more
Even though the summer heat is still upon us, it is officially back-to-school time in the Bay Area. When I was a youngster (decades ago), this rite of passage never oc… Read more
San Carlos Real Estate Just Listed! 132 Winding Way, San Carlos Offered at $1,988,000 3 bedrooms | 1 Bath 1,845 Sq Ft (per floor plan drawing) | 5,073 Sq Ft Lot (per … Read more
You’ve got questions and we can’t wait to answer them.